Indias Poverty Rate Drops to 5%, NITI Aayog CEO Announces

In a significant development, the latest consumer expenditure survey conducted by the National Sample Survey Office (NSSO) under the Ministry of Statistics and Programme Implementation has revealed a substantial decline in poverty levels in India. According to NITI Aayog CEO B V R Subrahmanyam, the survey indicates that poverty has come down to five percent in the country, signaling a positive trend in both rural and urban areas.

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Increased Per Capita Expenditure

The survey data shows a significant increase in per capita monthly household expenditure in 2022-23 compared to 2011-12. The average per capita monthly expenditure in rural areas stood at Rs 3,773, while in urban areas, it reached Rs 6,459. This substantial rise in expenditure reflects an improvement in the economic well-being of households across the country.

Poverty Assessment and Consumption Patterns

Subrahmanyam emphasized the importance of household consumption data in assessing the status of poverty and the effectiveness of poverty alleviation measures. The survey findings suggest that poverty in India is now below five percent, a conclusion supported by the data analysis. The average consumption of the lowest fractional group (0-5 percent) is approximately equal to the poverty line when adjusted for inflation using the Consumer Price Index (CPI). This indicates that poverty is primarily concentrated within this group.

Narrowing the Urban-Rural Consumption Gap

A notable takeaway from the survey is the faster growth of consumption in rural areas compared to urban areas. This trend is contributing to a narrowing of the gap between urban and rural incomes and consumption. The gap, which stood at 84 percent in 2011-12, has reduced to 71 percent in 2022-23. Subrahmanyam expressed optimism that if this trend continues, urban and rural incomes and consumption could potentially reach parity in the coming years.

Changing Food Consumption Patterns

The NSSO survey also highlights significant changes in food consumption patterns in both rural and urban areas. There has been a notable decline in the consumption of cereals and food as a share of the average Monthly Per Capita Consumption Expenditure (MPCE). In rural areas, the share of cereals has decreased from 22 percent in 1999-2000 and 10.7 percent in 2011-12 to less than five percent currently. Similarly, in urban areas, the share of cereals and food has reduced significantly.

Implications for CPI Inflation and GDP

Subrahmanyam pointed out the potential implications of the NSSO survey on the consumer price index (CPI) and GDP. The reduced contribution of food to CPI inflation suggests that inflation may have been overstated in earlier years. Additionally, the survey findings may have an impact on GDP calculations.

The latest consumer expenditure survey conducted by NSSO provides valuable insights into the economic well-being of households in India. The decline in poverty levels, the increase in per capita expenditure, and the changing consumption patterns indicate positive developments in both rural and urban areas. The findings have implications for policymaking and economic analysis, highlighting the need for continued efforts to address poverty and promote inclusive growth.